Implementing a supply chain blue book

Every hospital supply chain administrator fantasizes of an efficient way to create transparency in supply expense reporting and find cost savings. Administrators at Arizona’s Banner Health made their fantasy a reality, creating a supply chain blue book.

“The main functions we wanted the blue book to have were to be able to identify savings, provide internal benchmark reporting, address the differences in accounting practices and supply detailed reports to identify variances and opportunities on a monthly basis,” said Raymond Davis, supply chain management director of several of Banner’s facilities, during a presentation on Tuesday at the Healthcare Financial Management Association’s ANI 2013 in Orlando, Fla.

[See also: Supply chain improvement project yields positive results for Kansas and Missouri hospitals]

Davis explained that prior to the implementation of the supply chain blue book, Banner, which includes 23 acute care hospitals and a medical group with 917 providers, had limited supply expense reporting, variability in accounting in each facility and a lack of internal benchmark reports by service line or account.

“The blue book supports a new relationship dynamic between supply chain and clinical leadership from push to pull.”

Banner’s supply chain blue book is structured to include numerous useful reports and charts, including budget variances for total expense, statistic variance, rate versus volume variances, reports for each account, graphical representation of trends and comparisons and internal benchmarks said Claire Agnew, CFO of the Arizona East Region of Banner Medical Group.  

It targets senior management, supply chain leadership, the CFOs, department directors and managers, clinical discipline teams and anyone else within the Banner facilities that has impact on supply charges and utilization.

[See also: Banner Health cuts $41.5M from the supply chain]

“By region, each facility can compare what their inventory turnover looks like compared to other facilities in their size group,” said Agnew. “They might be under budget with their supplies, but compared to other facilities, their budget might be a lot higher overall, which they aren’t aware of.”

“The more we worked on this,” she added, “the more we realized there were a lot of assumptions we were making that weren’t always the case.”

[See also: Supply chain project yields positive results]